Read the entire contract. Every page. Every clause. Every definition. Memory care contracts are legally binding agreements that can lock your family into financial obligations running into tens or hundreds of thousands of dollars. They contain terms that determine when and how your parent can leave, what happens if they die within weeks of moving in, how much costs can increase each year, and what rights you're giving up by signing.
Most families don't read these contracts thoroughly. They're overwhelmed by the moving process, trusting of the friendly sales staff, and desperate to get their parent settled. They sign based on verbal assurances about what the contract contains, only to discover months later that the written terms differ significantly from what they were told.
Here's what to look for, what clauses cost families thousands in unexpected charges, and why having an attorney review the contract isn't optional if you want to protect yourself and your parent.
Have an Elder Law Attorney Review Before Signing
Before going into specific contract terms, this point needs to be absolutely clear: have an elder law attorney review the entire memory care contract before you sign it. Not a general practice attorney. Not a family lawyer. An elder law attorney who specifically understands senior living contracts and your state's regulations governing memory care facilities.
The cost of this review, typically $300-800 depending on contract complexity and your location, is money well spent. The attorney will identify problematic clauses, explain implications you wouldn't recognize on your own, and potentially save you thousands in avoidable costs or legal problems.
Do not rely on the facility's claim that their contract is "standard" or that "everyone signs without changes." Contracts can be negotiated. Terms can be modified. Clauses can be struck. But you need someone with legal expertise advocating for your interests, not just accepting whatever the facility presents.
Elder law attorneys understand which contract terms violate state regulations, which clauses are unenforceable, and which provisions create unacceptable financial risk. They can guide negotiations and document agreed-upon modifications properly.
Clauses That Cost Families Thousands
Certain contract terms create financial exposure that families don't recognize until bills arrive or situations change. These clauses are written to favor the facility, often buried in dense legal language that obscures their true impact.
Rate Increase Provisions
Most memory care contracts include clauses allowing the facility to increase monthly rates. The question is how much control you have over these increases and whether you're locked in regardless of how high costs go.
Some contracts allow annual rate increases without any cap. The facility might increase rates 3%, 5%, or even 10% per year, and you're obligated to continue paying or trigger the contract's termination penalties. Other contracts tie increases to inflation indices or state that rates "typically" increase by certain amounts, but that language isn't binding and actual increases can exceed what's described.
Look for contracts that cap annual increases at specific percentages and require written notice (typically 30-60 days) before implementing increases. Even with caps, understand that increases compound. A 5% annual increase means the $7,000 monthly rate becomes $8,940 after five years.
Have your attorney verify whether the rate increase provision is enforceable as written or whether state regulations impose additional protections. Some states limit how much and how often facilities can increase rates for existing residents.
Care Level Assessment Fees
Many memory care contracts include provisions allowing the facility to reassess residents' care needs and adjust charges accordingly. The assessment process determines whether your parent requires the basic level of care or higher "levels" that trigger additional monthly charges.
The problematic clauses give facilities unilateral discretion to conduct assessments, determine care levels, and implement fee increases based on their findings without any requirement for outside verification or meaningful appeals process.
These provisions can be used to systematically increase charges. A resident who's been stable might suddenly be assessed as needing a higher care level, adding $500-1,000 monthly to costs. The justification might be legitimate changes in condition, or it might reflect the facility's desire to increase revenue.
Strong contracts define clear, objective criteria for care level determination, specify assessment frequency (typically quarterly or semi-annually), require written notification with detailed justification for level changes, and include a formal appeals process with independent review.
Have your attorney examine how care levels are defined, who determines them, and what recourse you have if you believe an assessment is inaccurate. Vague language like "as determined by facility staff" or "based on professional judgment" provides no protection.
Community Fee and Deposit Terms
Most facilities charge an upfront community fee (often $1,000-5,000) and security deposit (typically one month's rent). The contract terms around these payments significantly impact what you get back if your parent leaves or passes away.
Non-refundable community fees are exactly that: you never get the money back regardless of circumstances. Some facilities charge hefty community fees even though similar facilities in the area charge less or none at all. Question whether this fee is negotiable.
Security deposits should be fully refundable minus legitimate charges for damages beyond normal wear. But contracts often include broad language about what can be deducted: "cleaning," "repairs," "updating," or "preparation for next resident." These vague terms allow facilities to deduct most or all of the deposit for routine turnover work.
Examine refund timelines carefully. Some contracts allow facilities 30, 60, or even 90 days to return deposits after move-out, during which time they can assess various charges. The longer the timeline, the more likely significant deductions occur.
Ask your attorney whether the deposit and fee terms are typical for your area and whether limitations on deductions are enforceable. Some states regulate deposit amounts and refund requirements, providing protection beyond contract terms.
Third-Party Service Fees
Contracts often specify that certain services are not included in monthly fees and must be arranged through third-party providers at resident expense. Common examples include podiatry, dental care, physical therapy, specialized medical equipment, and personal care items beyond basics.
The problematic clauses require third-party services be arranged through facility-approved vendors or give facilities kickback arrangements from providers. This eliminates your ability to shop for competitive pricing and can result in paying significantly inflated rates.
For example, the contract might state that any durable medical equipment must be ordered through the facility's "preferred vendor" at prices 50-100% higher than what you'd pay elsewhere. Or it might require beauty/barber services be provided by the facility's in-house salon at non-competitive rates.
Review these provisions with your attorney and push back on requirements that restrict your choice of vendors for services you're paying for separately. Many such restrictions are not actually enforceable, but facilities include them hoping families won't challenge.
Transportation and Accompaniment Fees
Many memory care facilities charge separately for transportation to medical appointments and require a staff member accompany residents, creating dual charges. A single doctor's appointment might cost $50-100 for transportation plus $40-75 for staff time.
These add up fast when residents require multiple appointments monthly. Contracts might not clearly disclose these fees or might describe them vaguely without specific pricing.
Request detailed fee schedules for all ancillary services in writing. If the contract doesn't specify pricing for services described as "additional cost," that's a red flag. You should know before signing what you'll actually pay for common services.
Medication Management and Pharmacy Requirements
Some memory care contracts require medication management services be provided by facility staff at additional cost and that prescriptions be filled through specific pharmacies. The combined effect can add $200-500 monthly to costs.
If your parent's medications are currently covered by Medicare Part D or other insurance using their existing pharmacy, mandatory switches to facility-preferred pharmacies might eliminate that coverage or create coordination problems. You end up paying out-of-pocket for medications that were previously covered.
Have your attorney review medication-related clauses to determine whether you can continue using your parent's existing pharmacy and insurance coverage or whether the facility can require changes that increase your costs.
Damage and Liability Provisions
Contracts typically include provisions about resident liability for property damage. Reasonable terms make residents responsible for damages they cause beyond normal wear. Problematic terms extend liability far beyond what's fair.
Watch for language making residents or their families liable for damages caused by other residents, damages in common areas, or vague categories like "necessary repairs" without defining what that means.
Some contracts include broad indemnification clauses where you agree to cover the facility's legal costs if they're sued over anything related to your parent's residency, even if the facility's negligence caused the problem. These clauses are often unenforceable but remain in contracts to intimidate families.
Your attorney should review all liability provisions to determine which are enforceable and whether any create unacceptable risk exposure.
Mandatory Arbitration and Class Action Waivers
Many memory care contracts include mandatory arbitration clauses requiring all disputes be resolved through binding arbitration rather than court. These clauses typically favor facilities by choosing arbitration forums and rules that make it difficult and expensive for families to pursue claims.
Arbitration can be faster than court litigation, but it also limits your ability to appeal unfavorable decisions, participate in class actions with other affected families, and access certain legal remedies.
Some contracts include class action waivers preventing residents from joining with others in collective legal actions against the facility even if systematic problems affect multiple families.
Elder law attorneys frequently recommend striking or modifying mandatory arbitration clauses. While facilities often claim these provisions are non-negotiable, many will agree to remove or modify them rather than lose a resident. If the facility absolutely refuses, understand you're giving up significant legal rights by signing with these clauses intact.
Annual or Multi-Year Contract Terms With Auto-Renewal
Some memory care contracts require committing to annual or multi-year terms with automatic renewal unless you provide written notice within specific timeframes (often 60-90 days before the term ends).
Missing the notification deadline locks you into another full term even if you want to move your parent elsewhere. This creates financial exposure of $50,000-100,000+ for an additional year you didn't intend to commit to.
Month-to-month terms are far more flexible and appropriate for memory care, where residents' conditions change unpredictably and moves may become necessary. If the contract includes longer terms with auto-renewal, negotiate for month-to-month or at minimum ensure you fully understand notification requirements and set reminders so you don't inadvertently renew.
Exit Clause Fine Print: What Happens When You Leave
In practice, this is where things break down for many families. You might assume you can leave whenever you give proper notice and owe nothing beyond that notice period. But memory care contracts often include extensive provisions around termination that can cost tens of thousands in unexpected charges or trap you in the facility long after you want to leave.
Notice Period Requirements
Most contracts require 30-60 days written notice before terminating. You continue paying full monthly rates during the entire notice period regardless of whether your parent remains in the facility.
If your parent needs to move immediately due to hospitalization, needing higher care, or other urgent circumstances, you're still obligated to pay for the full notice period even though the apartment sits empty. A 60-day notice requirement means paying $12,000-15,000 after your parent has already left.
Some states regulate notice periods and may limit facilities to 30 days or allow families to terminate immediately in certain circumstances (like death or permanent hospitalization). Your attorney can determine whether contract notice requirements comply with state regulations or whether you have more flexibility than the contract suggests.
Refund Policies for Prepaid Fees
Many facilities require residents prepay the first and last month's rent plus various fees at move-in. Understanding what happens to these prepayments if your parent leaves early is crucial.
The last month's rent should credit against your final month, but some contracts allow facilities to apply it to the notice period, meaning you effectively pay for a month beyond when you'd like the contract to end. If you prepaid first month, last month, and a community fee, and give 60 days notice, you might pay for three months beyond move-in just to leave.
Review carefully what happens to all prepayments and deposits if your parent leaves. Are they applied against termination obligations? Refunded separately? Subject to deductions? The contract should explicitly state how each prepayment is handled during termination.
Discharge vs. Voluntary Termination
Contracts distinguish between voluntary termination (you choose to leave) and involuntary discharge (facility requires you to leave). The financial implications differ significantly.
Voluntary termination typically requires full notice periods and forfeits various fees. Involuntary discharge might waive notice requirements but still involve charges for damages, cleaning, or other assessments.
But here's where it gets complicated: facilities sometimes characterize situations as voluntary termination when they're actually initiating discharge. If the facility tells you your parent needs to leave because their care needs exceed what the facility can provide, that's involuntary discharge even if they ask you to "voluntarily" give notice.
The distinction matters because some states provide greater protections for involuntary discharge, including shorter notice periods or refund requirements. Your attorney should clarify which termination provisions apply in different scenarios.
Death of Resident
Contracts should specify exactly what happens financially if your parent dies while residing at the facility. Critical questions include:
How much notice, if any, is required after death? (Some contracts require 30 days notice even after death, meaning you pay a month's rent after your parent has passed away)
What happens to prepaid fees and deposits? Are they refunded immediately or subject to the same processing timeline as regular terminations?
Who is responsible for removing personal belongings and by what deadline? What charges apply if belongings aren't removed within the specified timeframe?
Many families discover after a death that they owe thousands in continued monthly charges, storage fees for belongings, or forfeit deposits due to contract provisions they didn't understand.
Some states prohibit facilities from charging fees after death beyond a minimal notice period (often 7-15 days). Your attorney should verify whether death-related charges in the contract comply with state law.
Discharge Rights Buried on Page 14
Memory care contracts often include extensive discharge provisions that families don't discover until situations arise. These are frequently buried deep in the contract, sometimes in appendices or referenced attachments that aren't obviously part of the main agreement.
Facilities can discharge residents for numerous reasons, typically including:
Failure to pay (self-explanatory)
Care needs exceeding facility capabilities (most common for discharge)
Behavior endangering other residents or staff
Violation of facility rules
Loss of facility license or closure
The contract language around these discharge rights determines how much notice you receive, whether you have appeal rights, and what costs you're responsible for during discharge processes.
Vague provisions like "resident behavior incompatible with community living" or "care needs beyond facility resources" give administrators broad discretion to discharge residents without clear standards. Strong contracts define specific, objective criteria for discharge and include formal appeal processes.
Pay special attention to care needs discharge provisions. Memory care residents' conditions deteriorate over time. If the contract allows discharge whenever the facility determines they can no longer provide adequate care, you're at risk of forced move during vulnerable transitions.
Some contracts include provisions allowing facilities to discharge residents to higher care levels within the same company/organization at higher rates. This means you're not technically discharged, but you're required to accept a move to a different building or floor at significantly increased cost. The contract should require your consent for such transfers, but many are written to make them mandatory.
Financial Obligations After Discharge
Contracts sometimes include provisions requiring payment beyond move-out. These might involve:
Continued rent during notice period even after discharge
Penalties for early termination initiated by facility
Costs for apartment restoration or updating after resident leaves
Storage fees if belongings aren't removed within specified timeframes (sometimes as short as 24-48 hours for involuntary discharge)
These provisions can result in bills totaling thousands after your parent has already left the facility. Have your attorney identify all post-termination financial obligations so you understand the total cost of leaving.
Transfer vs. Discharge Within Same Company
If the facility is part of a larger organization, the contract might contain provisions about transfers to other facilities owned by the same company. These are sometimes characterized as "internal moves" rather than discharge, but they carry many of the same implications.
The contract might require you accept transfer to any company facility within a certain geographic radius (sometimes 50-100 miles) or forfeit rights to the current facility. This means your parent could be moved far from family and friends without meaningful recourse.
Review transfer provisions carefully with your attorney to understand when transfers can be required, whether you can decline without triggering discharge, and what happens to your deposit and fees if you refuse a transfer.
What to Negotiate Before Signing
Memory care contracts are more negotiable than facilities typically admit. Having your attorney present or review proposed modifications strengthens your negotiating position. Common negotiable terms include:
Community fees: Often reducible or waivable entirely, especially if occupancy is low or you're willing to commit to longer stay
Rate increase caps: Even if not in the standard contract, facilities may agree to specific annual increase limits
Notice periods: 30 days is more reasonable than 60-90 days and may be negotiable
Arbitration clauses: Many facilities will remove these rather than lose a resident
Care level assessment: Adding specific criteria and appeals processes protects against arbitrary increases
Document all negotiated modifications in writing as amendments to the contract signed by both parties. Verbal agreements are not enforceable. Do not accept assurances that "we don't actually enforce that provision" without getting it struck from the contract.
Red Flags in Memory Care Contracts
Certain contract terms should trigger serious concern and potentially cause you to look elsewhere:
Unlimited rate increases with no notice requirements: Gives facilities complete financial control over you
Automatic renewals for annual or multi-year terms: Traps you in costly commitments
Broad discharge provisions with no appeal process: Allows arbitrary eviction
Mandatory arbitration with class action waivers: Eliminates most legal recourse
Liability for other residents' actions or facility negligence: Creates unfair exposure
Requirement to accept transfers anywhere within company's system: Forces moves far from family
Fees continuing indefinitely after death: Exploits families during grief
No itemization of included vs. additional services: Hides true costs
If multiple red flags appear, consult your attorney about whether the contract creates unacceptable risk. Sometimes the right answer is walking away and finding a facility with more reasonable terms.
Final Steps Before Signing
After your attorney reviews the contract and you negotiate any modifications:
- Read the entire final version yourself, including all attachments and appendices
- Verify all negotiated changes are documented in writing
- Ensure you have copies of everything you're signing
- Understand the exact payment obligations for the first three months
- Know the exact process and costs for leaving if necessary
- Have clear contact information for escalating concerns if problems arise
- Document the facility's condition on move-in with photos and written notes
Memory care contracts govern one of the most significant financial commitments most families make. Treating them with appropriate legal caution isn't paranoia. It's protection.
Important Legal Information
This article provides general educational information about memory care contracts and common contract terms. Contract terms vary significantly by facility and state, and contracts have legal and financial implications. Before signing any memory care contract, have the entire agreement reviewed by an elder law attorney who can advise you on your specific situation and state laws. This information is educational, not legal advice.